Importers criticize USW's antidumping duty petition

WASHINGTON—Importers of Chinese tires are condemning the United Steelworkers' June 3 filing of petitions to the International Trade Commission and Department of Commerce, requesting antidumping and countervailing duties against passenger and light truck tires imported from China.

“My reaction is that it's purely politically driven,” said Joseph Dale Guerreri, vice president of marketing for Horizon Tire Corp. “I believe that it's bad for the consumer—a de facto tax to them via the tariffs coming into our government—and will again prove to not protect U.S. jobs.”

The USW, however, insists the enormous upsurge of Chinese tire shipments necessitates new tariffs.

“Unfairly priced imports of tires from China have resumed flooding the U.S. market,” said USW International President Leo W. Gerard in a news release announcing the ITC and Commerce petitions.

The ITC has a July 18 deadline to make a preliminary determination on whether antidumping and countervailing duties are justified against passenger and light truck tires imported from China. It then must transmit its findings to the Commerce Department by July 25, according to a June 9 Federal Register notice. Commerce may extend the deadline if the ITC requests more time, the notice said.

If the ITC finds in the affirmative, Commerce will begin its preliminary investigation. If Commerce finds evidence of material injury to the U.S. tire industry, a full investigation will begin.

Since the Obama administration's high tariffs on Chinese tires, levied under Section 421 of the Trade Act—which ended in September 2012—Chinese tire shipments have more than doubled, according to USW figures.

“Filing trade cases is not something we take lightly,” Gerard said. “We would prefer that countries live by the rules. But when our members are injured, the Steelworkers act.”

This marks the second time in five years the USW has requested relief from increased imports of Chinese passenger and light truck tires.

In April 2009, the USW petitioned the ITC for relief under Section 421, which provides relief for U.S. industries being injured by massive increases in Chinese imports.

Between 2004 and 2008, Chinese passenger and light truck tire imports to the U.S. more than tripled, from under 15 million units to more than 46 million, the union told the ITC. This upsurge has transparently caused reductions in U.S. tire production and the layoffs of tire manufacturing workers, it said.

Several members of Congress backed the USW's call for relief, as did representatives of other industries including steel, textiles, furniture and agriculture who said they were being injured by Chinese imports.

The Tire Industry Association and many of its most prominent dealer and distributor members opposed relief, as did tire manufacturers Cooper Tire & Rubber Co. and Toyo Tire U.S.A. Inc.

U.S. tire facilities don't make the kinds of tires made in China, opponents argued, and putting barriers against Chinese imports wouldn't persuade U.S. plants to start making those tires.

Blocking Chinese imports only would create shortages in the low end of the new tire market, raise prices for consumers with limited incomes and cause Asian tire makers to move production from China to nearby countries, they said. Also, job losses among tire distributors and wholesalers would offset any employment gains in tire manufacturing, they said.

The ITC and the Office of the U.S. Trade Representative found in the USW's favor. In September 2009, President Obama signed an order calling for three years of tariffs against Chinese tire imports.

The tariffs amounted to 39 percent the first year, 34 percent the second and 29 percent the third. In September 2012, tariffs on Chinese tires reverted to the traditional rate of 4 percent.

In its new petitions, the USW asserted that the end of the higher tariffs has been disastrous for the domestic tire industry.

The petitions consist of three volumes. The first two, making the case for antidumping duties, compare China's labor and raw materials costs with those of Thailand, which the USW describes as the most directly comparable tire producing country with China.

The union concluded that China's dumping margins are as high as 92 percent. Publicly available price information from tire retailers, it said, indicates Chinese tires are priced 12 to 40 percent below comparable U.S. tires.

The third volume, which asks the government for countervailing duties, identifies 41 different subsidy programs available to Chinese tire makers, including numerous export subsidies expressly forbidden by trade law.

“With China no longer subject to Section 421 relief, it has once again targeted the U.S. market for its exports,” the USW said.

From 24.6 million units in 2011, Chinese tire shipments to the U.S. jumped to 31.5 million in 2012 and 50.8 million in 2013, the union said.

“There have already been employment reductions at U.S. plants as imports from China have surged,” the USW said. “If these trends are allowed to continue, U.S. producers may lose another 10 million tire shipments to Chinese imports in 2014.”

Most of the companies and organizations contacted about the USW petitions declined comment, including Michelin North America Inc. and Giti Tire (U.S.A.) Ltd., U.S. arm of the Singapore-based Giti Tire. Goodyear said only that it was “a proponent of free and fair trade across the globe.”

Toyo said it was still studying the petitions, as did Bridgestone Americas Inc. TIA Executive Vice President Roy Littlefield said the TIA Board of Directors would discuss the petitions as its meeting in San Francisco the week of June 9.

“But our historical stand has been very much against tariffs,” Littlefield said.

Chris Brackin, vice president of sales for American Omni Trading Co., agreed with Guerreri that tariffs against Chinese tires are not good for the U.S.

“This administration had the opportunity to extend the previous tariff, but they chose not to, which clearly shows they didn't see the harm,” Brackin said. “If they truly want to protect jobs, they should look at further regulating the factories in China rather than just taking the easy way out with a tax.”